Spectris' first-half profit declines amid challenging trading environment

Instrumentation and controls developer Spectris expects full-year profits to be lower than expectations due to a challenging environment and cost reduction measures.

The group's half-year pre-tax profits declined 16% to £49.2m, but revenues rose 4.3% to £563.2m driven by acquisitions.

Earnings per share fell to 33.9p for the six months ended 30 June 2015 from 39.4p the same time last year.

Reported sales grew 4% to £563.2m thanks to a £22.9m contribution from acquisitions. Adverse foreign exchange currency movements, however, hurt sales by 1%.

Sales fell 2% in the US, 4% in China and 5% in Japan. Sales growth in Europe moderated to 4% due to a weaker market in Germany.

Chief executive John O'Higgins said: "Given the challenging near term trading environment and the net effect of these cost reduction measures, full year adjusted operating profit is anticipated to be around the low end of market expectations."

The company previously posted forecasts of adjusted operating profit of between £200 and £223.4m for the full-year.

However, the chief executive said its market exposures, continuing investments in new products, strong cash flow and robust financial position make the company believe is "well positioned to deliver on its growth strategy".

Investec put its estimates, target price and recommendation under review and said: "Although we like the business model of Spectris and its habitual robust cash generation, the current state of end markets leaves little to get excited about.

"A combination of declining demand and currency headwinds will take expectations down and the shares are likely to tread water, at best, until there are signs of better momentum."

Shares fell 1.18% to 1925p on Thursday at 11:37.